INDIAN ECONOMY
• First Plan - Emphasized on agriculture, price stability, power & transport.
(1951-56)
• Second Plan - Its objective was rapid industrialization.
(1956-61)
• Third Plan - Its aim was to make India a ‘self-reliant’ and ‘self-generating’ economy.
(1961-66)
Plan holiday for 3 years. The prevailing crises in agriculture and serious food shortage necessitated the emphasis on agriculture during the Annual Plans.
Main emphasis on agriculture’s growth rate so that a chain reaction can start.
The fifth Plan is to achieve the two main objectives ‘removal of Poverty’ (Garibi Hatao) and ‘attainment of self reliance’, through promotion of high rate of growth, better distribution of income and a very significant growth in the domestic rate of savings.
There were two sixth Plans.One by Janta Govt.(for 78-83) which was in operation for 2 years only and the other by the congress Govt. when it returned to power in 1980.
- The Janta Govt plan is also called Rolling Plan.
Objectives: Increase in national income, modernization of technology, ensuring continuous decrease in poverty and unemployment , population control through family planning, etc
The seventh plan emphasized policies and programs which aimed
at rapid growth in food grains production, increased employment
oppurnities and productivity within the framework of basic
tenants of planning.
It was a great success, he economy recorded 6% growth against the targeted 5%.
• Eighth Plan - It was postponed by two years. Some of the main economic
(1992 – 97) performances during eighth plan period were rapid economic
growth, high growth of agriculture and allied sector, and manufacturing sector, growth in exports and imports, improvement in trade and current account deficit.
• Ninth Plan - It was developed in the context of our important dimensions:
(1997 – 2002) Quality of life, generation of productive employment,
regional balance and self – reliance.
• Tenth Plan - To achieve the growth rate of GDP @ 8%.
(2002 – 2007)
INDIAN ECONOMY
• Current account deficit narrows to $ 3.8 b. (March 2006)
• India’s forex reserves stood at $144b. on Dec. 23. (January 2006)
• India’s oil import bill hits a record high of $ 43.8 b. in 2005-2006. (April 2006)
• Industrial growth dips to 8 p.c. in ’05-06’ as against 8.4 in ’04-05’. (May 2006)
IMPORTANT SECTORS IN INDIAN ECONOMY
TEXTILE
A. Cotton Textile Industry
• India emerges as the second largest global cotton producer in the year October 2006
India is the third largest cotton textile manufacturing country in the world after USA and the UK. It is the third largest exporter of cotton textiles after Japan and the USA. Cotton textile is a major industry in India as it directly or indirectly supports more than nearly 40 per cent of the country’s labour force.
The most important cotton cloth producing states in India are Maharashtra, Gujarat and Tamil Nadu other states are Bengal, Uttar Pradesh, Madhya Pradesh, Rajasthan, Andhra Pradesh, Karnataka, etc.
• Silk Textile Industry
India is the second largest producer of silk in the World after China. India also has the distinction of manufacturing four varieties of silk, namely mulberry, eri, tasar and muga silk produced from Assam. It also has a long tradition of manufacturing and producing silk textiles.
• Silk Weaving Centres in India
Karnataka: Bangalore, Hubli, Dharwar, Mysore and Belgaum.
West Bengal: Murshidabad, Bankura and Shahjahanpur.
Uttar Pradesh: Varanasi, Mirzapur and Shahjahanpur.
Tamil Nadu: Salem, Tirunelveli, Nilgiris, Kanchipuram.
Jammu & Kashmir: Srinagar.
Bihar: Bhagalpur.
Assam: Kamrup and Navgaon
Punjab: Amritsar, Jalandhar and Ludhiana.
Gujarat: Ahmedabad.
• Textile Minister – Shanker Singh Vaghela
• Textile industry under threat from new EU technology.
• The booming Indian garment sector, which is worth $8 billion and generates more than 10 million jobs, is set to face a serious challenge from an European technology breakthrough. The European Union, along with Western European Textile companies and research institute is working on an ambitious 224 euros million project called Leapfrog. This project is an attempt to eliminate the labour- intensive nature of garment making.
• After Agriculture, textile is the second largest employer in the country.
(January 2007 )
• Budget 2006-07: What weave textiles?
Last year was a crucial year for the Indian textile industry as January 2005 saw the lifting of quotas which lead to a moderate surge in exports. Many players, big and small, have been scaling up their business in a bid to face increasing
competition. A large number of players raised money to fund their expansion plans and a lot more are expected to follow suit this year too. With the industry poised to grow by leaps and bounds, it was hoping for more “compassion” from finance minister P Chidambaram.
Nonetheless there were some points to cheer about. IMAGES BoF lists some that are for India Inc at large and the textile industry in particular:
• Economy to aim for 10 percent growth in FY 06.
• Government intends to make India a manufacturing hub for textiles.
• Thrust industries: textile among others.
• Government announced setting up of 12 textile industry parks, of which seven have been approved and ten more in the pipeline. A fund of Rs 1.89 billion has been proposed for Integrated Textile Parks.
• Encouraging response to technology upgradation and setting up parks.
• Import duty on all man-made fibres and yarn cut from 15 percent to 10 percent
• Excise duty reduced from 16 percent to 8 percent on all man-made yarn.
• Customs duty on textiles fabrics and garments has been proposed to be reduced from 15 to 12.5 percent. Additional duty of customs of 4 percent against the sales tax paid on domestic purchases.
• Duty on leather footwear reduced to 8 percent.
• India to become to gems and Jewellery hub.
• An expert body to be formed for gems and Jewellery sector; sector to get incentives.
• Jute Technology Mission to be set up in 2007.
• 50 handicraft villages to be identified for foreign tourists.
• Additional 100 clusters proposed to be covered under the scheme of handloom cluster development and oversee their implementation.
• A National Jute Board to be set up. Like Wool mark, there will be a handloom mark to certify its quality.
• An Investors Protection Fund will be set up and funded by fines and penalties to safeguard the interests of retail investors. (January 2007 )
• Textile, apparel Key areas of difference at WTO
The World Trade Organisation’s Doha round of world trade talks has broken down and the treatment of textiles and apparel has been a major area of contention.
US textile and fibre industry groups argue that if textiles are subsumed into the overall industrial products classification they would be vulnerable to deep tariff cuts and a takeover of world export markets by countries like China and India.
US textile makers fear that they would be hurt by a flood of imports from some of the poor countries, especially Bangladesh and Cambodia.
Textile and clothing exports account for a high share of total merchandise export in South Asian countries such as 68 per cent of Pakistan’s exports and around 50 per cent of Nepal and Sri Lanka’s exports.
The textile industry contributes nearly 30 per cent to India’s exports. India has seen its textile exports to the US rise by 27 per cent from US$7.4bn. Compared to China’s textile exports of US $60 billion, India’s exports are a scanty $16 billion even though the domestic market accounts for about $40 billion. (January 2007)
• India beats China in textile exports. (March 2006)
• India’s textile exports are expected to touch $ 22 billion this fiscal, up 25 percent from 2005-06 according to the textiles Minister Shankersinh Vaghela. He, however, reduced the projected cotton production at 250 lakh bales for the current fiscal as against earlier estimates of 270 lakh bales. (December 2006)
• India’s textile exports growth of 12.4% during April – August was considerably less than China’s textile. (December 2006)
• Engineering goods continued to be the largest contributor to India’s total merchandise exports reaching $10.5 billion in the April-August period ahead of petroleum products, chemicals, gems & jewellery and textiles. (December 2006)
B. AGRICULTURE
• India is primarily an agricultural country as two-third of its population depends on agriculture. Agriculture accounts for 25 per cent of its Gross Domestic Product (GDP), 16 percent share of the total value of the country’s export and provides employment to about 65 per cent of labour force. (2006)
• Top Priority to Agriculture in 11th Plan. (2006)
• National Commodity and Derivatives Exchange (NCDEX) emerges world’s third largest agricultural exchange. (September 2006)
• India Top buyer of Russian wheat
Moscow: Recent large – scale wheat exports to India have seen the Asian country emerge as the top buyer of Russian exports. While supporting Russian exports, it has also made Russian companies dependent on shipments to India. With shipments to India now complete, Russian exporters will have to try restoring positions on traditional markets, particularly northern Africa. (December 2006)
C. JEWELLERY
• Gems & jew Foreign Trade policy Annual supplement released, with $ 120 b. as export target and sector specific initiatives to make India a hub for gems and Jewellery exports and a major refueling stop for International flights. (April 2006)
• The gems and jewellery net exports increased 5.7% to $ 16, 141.49 million during April-December 2006 against $15,271 million in the same period last year. Total exports, cluding export of rough diamonds, jumped 7% to $ 16,708 million during April-December 2006. (January 2007)
• China may rival India in gems & Jewellery industry
Mumbai: The news is sure to add to the gloom in the Indian gems and Jewellery industry hit by a downturn. While global jewellery sales are expected to grow 4.6% year-on-year to touch $230 billion in 2015, India’s share of the diamond processing industry in value terms is predicted to drop 8% to 57% by 2015.
China, on the other hand, will emerge as a strong player with 21.3% of the diamond processing share. The good news is that cutting, polishing and distribution centres in Africa. Equally, India and China together will emerge as a market equivalent to US by 2015.
The US is currently the world’s largest market for jewellery and accounted for an estimated 31% of world jewellery sales in 2005. However, India and China are the emerging centres of jewellery consumption and have steadily increased their share
Share of the pie to 8.3 % and 8.9 % respectively. The report predicts that both India and China will be the new centres for fabrication of studded jewellery as the US’s share will decline. (December 2006)
• INDIA and China will together buy as much jewellery as the US by 2015, says a joint study by Gems and Jewellery Export Promotion Council and consulting firm KPMG. Jewellery sales is likely to grow at 6.7% to touch $ 280 billion during the same period against the current level of $ 146 billion.
According to the study, at present the US is the world’s largest market for jewellery and accounted for 31% of the global jewellery sales last year. India and China, which are considered to be the emerging centers of jewellery consumption, witnessed a growth of 8.3% and 8.9%, respectively, during the previous year.
According to the study, global sales of jewellery are expected to grow at 4.6% annually to touch $230 billion by 2015. However, the growth will be sluggish when compared to other luxury products like watches, perfumes and even apparels.
Palladium, a transition metal of platinum group, is expected to establish itself as an alternative metal for jewellery fabrication while gold and diamond will continue to dominate accounting for nearly 82% of the market share. Within the jewels, diamond is expected to grow at a slowest pace of 3.3% annually. (December 2006)
• The Federation of Italian Jewellers said India has upstaged Italy to bag the lead position in gold jewellery making. (January 2007 )
D. FOOTWEAR
• India makes 15% of global footwear
India is the second largest footwear manufacture in the world, accounting for 15 percent of global footwear production. The country’s footwear exports stood at $858.8 million in FY `05, which translates into 1:1 percent of the total merchandise exports. The leather footwear alone accounts for 67 percent of the total footwear exports. Footwear alone accounts for 32percent of the total value of leather and leather product exports. UK is the most important market for footwear exports.
E. PETRO INDUSTRY
• High-octane petrogoods No. 1 on export charts
• For the first time, petroleum products have turned out to be the highest export earner. The export growth, which stood at $8.35 billion in the first five months this fiscal compared to $3.84 billion, has been largely so due to the spurt in global prices and skewed domestic retail pricing policy that has pushed major players such as Reliance Industries (RIL) to pump more into the export market.
The petroproduct segment has edged out gems & jewellery from the largest export - earner slot. The refining sector has emerged as the top merchandise exporter of the country with 117% jump in export of petroleum products in the first five months of the fiscal.
Exports up 35%, imports 33 %
• The USA, UAE, Singapore China and the UK accounted for 42% of India’s total exports in the first five months of the current fiscal. Growth in exports to UAE during the period was 74.1% which was more than double the overall growth in exports of 35%. While exports from Singapore increase by 33.7%, exports to other destinations registered much lower growth rates with the US at 17.1%, China at 16.9% and the UK at 11.8%. (December 2006)
• Merchandise exports from India increased by 35% in the first eight months of the fiscal. (December 2006)
• Major drivers of exports during the April-August period included petroleum products (growing at 117.2%), other engineering items (55.5%), processed minerals (36.6%), other ores & minerals (34.9%), machinery & instruments (45.1%) and pharmaceuticals & cosmetics (26%).(December 2006)
• Petroleum products exports experienced a robust growth of 117% during the period over the corresponding period for the previous year and increased its share in total exports from 9.7% to 16.5%. The review said that the development reflected India’s enhanced refining capacity and the high international POL (Petroleum, oil & lubricants) prices. (December 2006)
F. Sugar Industry
Sugar industry is India’s second largest organised industry next to cotton textiles. About 45 million farmers, their dependents and a large agricultural labour force, constituting 7.5 per cent of the rural population, are involved in sugarcane cultivation, harvesting and ancillary activities. Besides, about 0.5 million skilled and unskilled workers are engaged in the sugar industry. There are 500 installed sugar factories in India (as on March 31, 2004).
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